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Announcement of Interim Results for the 6 months to 30 September 2008

27 November 2008

Chairman's Statement

I can report that turnover for the six months ended 30 September 2008 was slightly lower than expected at £0.9 million (2007: £1.1 million). This reflects further growth in sales of Access Control and FollowMe® product lines but a sharp decline in the older Token Ring products and N-Lynx sales.  

Despite achieving a further decrease in operating costs, the reduction in sales during the period has resulted in an operating loss of £77,000 (2007: profit of £48,000).

The Group made a pre-tax loss of £85,000 for the six months ended 30 September 2008 compared to a profit of £21,000 in the same period last year. The loss per share for the half year is 4.14p.

Against the background of a severe economic downturn in the last two months of the period, the Company has performed well. As outlined in the Annual Report and Accounts, we have continued investing in our sales and support operations in the US and UK and we expected that the increased cost base would result in only a small profit for the period which turned into a small loss. We have reviewed our models for the next 18 months and expect to be able to report an overall profit for the second half of this financial year, in line with the seasonality of our business sector consistently experienced each year over the last 10 years.

The Company's mix of sales is currently: 9% Networked Access Control System products; 81% FollowMe® Printing Systems; and 9% Token-Ring and N-Lynx products with 1% legacy products.

Guidance

The Directors continue to consider a restructuring of the Company's shares to allow payment of a dividend at the earliest possible time.

Our networked fax receivers that convert incoming fax to email and related fax convergence products have started to see further increased sales. However, we believe that due to a corporate spending downturn, it is wise to adjust our expectations of sales from this product line which are now likely to make a more significant contribution to sales in the next financial year.

We are re-aligning our product focus to the current economic situation and corporate spending patterns and believe that the full year is likely to conclude with an overall profit.

Klaus Bollmann

Chairman

Responsibility Statement

We confirm that to the best of our knowledge:

(a)    the condensed set of financial statements contained in this document has beenprepared in accordance with International Accounting Standard 34 ('IAS 34'), 'Interim Financial Reporting' as adopted by the European Union;

(b)    the Interim management report contained in this document includes a fair review of the information required by the Financial Services Authority's Disclosure and Transparency Rules ('DTR') 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)    this document includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

INCOME STATEMENTS
	6 Months to	6 Months to	12 Months to
	30.9.08	30.9.07	31.3.08
	£'000	£'000	£'000
Revenue	899	1,134	2,195
Operating costs	(976)	(1,086)	(2,061)
Operating Profit/(Loss)	(77)	48	134
Interest	(4)	(20)	(29)
Profit/(Loss) before taxation	(81)	28	105
Tax on loss on ordinary activities	(4)	(7)	(50)
Profit/(Loss) after taxation	(85)	21	55
Profit/(Loss) per Ordinary Share	-4.14p	1.01p	2.7p

BALANCE SHEETS
	30.9.08	30.9.07	31.3.08
	£'000	£'000	£'000
Non Current Assets
Property, Plant & Equipment	242	262	223
Investments	40	28	40
Development Costs	983	658	794
Deferred Tax Asset	71	97	66
	1,336	1,045	1,123
Current Assets
Inventories	975	916	898
Trade and Other Receivables	406	652	581
Cash and Cash Equivalents	50	41	35
	1,431	1,609	1,514
	2,767	2,654	2,637
Current Liabilities
Trade and Other Payables	1,443	1,206	1,222
Bank Overdrafts and Loans	96	197	159
	1,539	1,403	1,381
Non Current Liabilities
Loans	560	609	547
Total Liabilities	2,099	2,012	1,928
Equity
Called Up Share Capital	4,112	4,112	4,112
Share Premium Account	8,028	8,028	8,028
Currency Translation Reserve	(24)	(89)	(68)
Capital Redemption Reserve	12	12	12
Revaluation Reserve	12	0	12
Retained Loss	(11,472)	(11,421)	(11,387)
Total Equity	668	642	709
Total Liabilities and Equity	2,767	2,654	2,637

CASH FLOW STATEMENTS
	6 Months to	6 Months to	12 Months to
	30.9.08	30.9.07	31.3.08
	£'000	£'000	£'000
Net Cash Inflow/(Outflow) from operating activities	193	53	330
Investing Activities
Payments to Acquire Tangible Fixed Assets	(38)	(9)	(11)
Payments to Acquire Intangible Fixed Assets	(142)	(69)	(251)
Net Cash Inflow/(Outflow) from Investing	(180)	(78)	(262)
Financing Activities
Repayment of Borrowings	0	(108)	(37)
Increase/(Decrease) in Bank Overdrafts	(32)	(2)	(14)
Proceeds from Borrowings	34	158	0
Net Cash Inflow/(Outflow) from Financing	2	48	(51)
Cash and Cash Equivalents at Beginning of Period	35	18	18
Cash and Cash Equivalents at End of Period	50	41	35

STATEMENT OF CHANGES IN EQUITY

					Foreign
	Revaluation	Share	Share	Other	Currency	Retained
	Reserve	Capital	Premium	Reserves	Reserve	Loss
1st April 2007	0	4,112	8,028	12	(54)	(11,442)
Profit for the Period						21
Exchange Movement					(35)
30th September 2007	0	4,112	8,028	12	(89)	(11,421)
Profit for the Period						34
Exchange Movement					21
Revaluation	12
31st March 2008	12	4,112	8,028	12	(68)	(11,387)
Loss for the Period						(85)
Exchange Movement					44
30th September 2008	12	4,112	8,028	12	(24)	(11,472)

NOTES TO THE INTERIM STATEMENT

1. Basis of Preparation

The interim financial statements have been prepared in accordance with the accounting policies as set out in the Group financial statements for the 12 months ended 31 March 2008. The statements do not comprise full financial statement within the meaning of section 240 of the Companies Act 1985. The statements are unaudited and have not been independently reviewed.

The figures for the 12 months ended 31 March 2008 have been extracted from those financial statements.

2. Interim Dividend

The Directors continue to be unable to recommend the payment of a dividend for the 6 months ended 30 September 2008.

3. Loss per Share

Loss per share has been calculated on a loss after taxation of £85,000 (2007: profit £21,000) and 2,055,971 £2 ordinary shares (2007: 2,055,971 £2 ordinary shares). 

4. Stock 

The Directors have reviewed the Group's inventory and remain confident that it will all be sold for at least its book value. However, in view of the current state of the market there must be a level of uncertainty surrounding the ability to realise certain items of inventory at greater than or equal to book value. 

5. Creditors' amounts due within one year

Included within creditors is the sum of £152,000 due to the executive directors, who have given loans to the company to finance the increase in sales and marketing activities in the previous period. 

6. Related Party Transactions

Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed. The following transactions to place in the period ended 30th September 2008 at arms length:

 

Woodgate Trust charged £19,800 in respect of rent and an amount of £59,551 was outstanding to Woodgate Trust at 30th September 2008.

 

Webpage-Marketing.Com Limited is considered to be a related party as it is controlled by close family of K. Bollmann and Mrs H. Bollmann. During the period, purchases of £145,610 were made from this company. At 30th September 2008 £863,646 was outstanding to Webpage-Marketing.Com Limited. Webpage-Marketing.Com Limited owed the company £21,089 at the end of the period in respect of rates recharges.

 

Woodgate Property Inc is considered to be a related party as it is controlled by K. Bollmann and Mrs H. Bollmann. Woodgate Property Inc charged the group £20,713 in respect of rent during the period and at the end of the period £154,204 was owed by the group to Woodgate Property Inc.

 

Woodgate FURBS is considered to be a related party as K. Bollmann and Mrs H. Bollmann are trustees. At the end of the period £244,000 was owed by the group to Woodgate FURBS.

 

The ultimate controlling party is K. Bollmann and Mrs H. Bollmann via their shareholdings and as trustees of The woodgate Trust which also holds shares in the Company. At the end of the period £152,205 was owed by the group to K. Bollmann and Mrs H. Bollmann.

7. Segmental Information

For management purposes, the Group is currently organised into one business segment, which is computer products and services. Since this is the only primary reporting segment no further information has been shown. The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the goods and services:

	6 Months to	6 Months to	12 Months to
	30.9.08	30.9.07	31.3.08
	£'000	£'000	£'000
Revenue by Geographical Market
United Kingdom	278	361	567
EC and other European Countries	240	306	582
United States of America	273	398	850
Japan and Asia Pacific	7	5	23
Rest of World	101	64	173
	899	1,134	2,195

The following is an analysis of the carrying amount of segmental assets, and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the assets are located:

Carrying amount of Segment Assets
United Kingdom	945	1,072	1,063
United States of America	1,760	1,510	1,503
Germany	62	72	71
	2,767	2,654	2,637
Carrying amount of Segment Liabilities
United Kingdom	819	1,027	918
United States of America	1,262	971	985
Germany	18	14	25
	2,099	2,012	1,928
Additions to Tangible and Intangible Assets
United Kingdom	30	5	57
United States of America	150	73	204
Germany	0	0	1
	180	78	262
Depreciation and Amortisation
United Kingdom	17	17	37
United States of America	54	51	103
Germany	0	14	24
	71	82	164
Results by Segment
United Kingdom	161	133	82
United States of America	(248)	(100)	(12)
Germany	2	(12)	(15)
	(85)	21	55

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ENDIR FEWSAWSASESF